Crypto Sentiment Index Remains Positive Despite Market Corrections, Report Finds Favorable Outlook
In a recent analysis of the crypto market, ETC Group’s Head of Research, Andre Dragosh, highlighted the current state of the market and provided insights into performance dynamics, profit-taking behavior, and derivative trends. Despite some limitations due to stronger-than-expected US jobs data, crypto assets demonstrated resilience and outperformed traditional assets like equities.
Altcoins, such as Avalanche (AVAX) and Cardano (ADA), experienced significant gains during this period, with returns exceeding 50%. This surge in altcoin outperformance points towards a high-risk appetite within the crypto market. On the other hand, on-chain data for Bitcoin indicates that investors are increasingly taking profits, as indicated by the rising number of coins in profit being sent to exchanges.
ETC Group’s Crypto Asset Sentiment Index indicated positive market sentiment, although there were major reversals observed in the Crypto Dispersion Index and the BTC 25-delta 1-month option skew. The Crypto Fear & Greed Index remained in “Greed” territory, signaling ongoing market optimism. While ETC Group’s Cross Asset Risk Appetite (CARA) measure slightly declined, it remained in positive territory, suggesting a decrease in risk appetite in traditional financial markets.
Performance dispersion among digital assets decreased compared to previous weeks but remained relatively high. This implies that correlations among crypto assets have decreased, and investment decisions are driven by specific factors related to each coin. Diversification among digital assets is emphasized as a result.
Profit-taking activity has increased, particularly among short-term holders, as Bitcoin approaches recent highs. This has led to higher selling pressure in the market. Long-term holders have also moved profitable coins to exchanges, potentially impacting short-term price increases. However, there is no evidence of older coins being spent, which would indicate a larger price correction.
Aggregate open interest in BTC futures and perpetual remained stable, with notable short liquidations in futures. BTC option open interest saw a significant increase, with a higher demand for puts compared to calls. Despite this, overall implied volatilities did not change significantly.
Currently, Bitcoin has lost its $42,000 support line and is trading at $41,600, down 5% in the last 24 hours.